When Nancy Perryman stopped working, she was the Western Farm Bureau Insurance Company’s agency manager for metropolitan Phoenix and Northern Arizona. It was a complex job, in which she supervised between 18 and 21 insurance agents at Western Farm Bureau’s various insurance offices. She’s earned around $300,000 each year in commissions, with average monthly earnings of almost $19,000 for the two years before she stopped working.

Perryman had been diagnosed by Dr. Jerry M. Fioramonti in June of 1994 with chronic fatigue syndrome (CFS). She continued to work, cutting back her workload from 10 to 12 hours a day, often including weekends, to 8 hour work days with weekends off. Even this level of work became unsustainable. She finally reached a mutual agreement with her supervisor that the time had come for her to stop working when she left work on February 28, 1997.

As an employee of Western Farm Bureau, Perryman had participated in the ERISA governed disability plan offered by her employer through Provident Life and Accident Insurance Company (Provident). She filed her claim with Provident for long-term disability benefits in April 1997.

Provident approves long-term disability benefits for two years under “own occupation” definition.

Provident reviewed the facts supporting Perryman’s disability and reached the conclusion in January 1998 that she qualified under the “Own Occupation” provision of the disability insurance plan. The “Own Occupation” clause agreed to pay benefits if due to illness or injury, Perryman was unable to perform the essential duties of her position as agency manager. Provident made the disability payments retroactive to June 1, 1997.

When May 31, 1999 rolled around, Provident terminated Perryman’s long-term disability benefit payments, because the insurance company had decided that she was capable of working in a number of occupations. The “Any Occupation” provision in the policy meant that Perryman had to be considered disabled from any occupation in order to continue receiving benefits. She would qualify if she met either of two definitions due to illness or injury.

She qualified if her illness or injury made it impossible to work in any occupation.

Or she qualified if she was unable to earn enough income to match 80% of the index earnings from any occupation which she was reasonably fitted by education, training or experience to perform. Indexed earnings were, according to the policy, to be based on the Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers. Provident defined the “Any Occupation Period” as the time span between Perryman’s qualifying for long-term disability benefits under the “Own Occupation” clause and the age of 65.

Perryman appealed Provident’s termination of her long-term disability benefits with the assistance of a disability attorney. When the administrative appeals process failed to reverse Provident’s decision, they took the matter before the U.S. District Court for the District of Arizona.

Disability attorney argues for de novo review, Provident agrees.

The first thing the Court had to address was whether Perryman had established her inability to work in any occupation through the evidence she had supplied to Provident. The Court concluded that the main issues were:

Was Perryman able to work despite her impairments?

Was Perryman able to meet the earnings and vocational requirements of the policy?

Was Perryman disqualified under the mental limitations provision of the policy?

Provident claimed that Perryman had been misdiagnosed with CFS and was in reality suffering from depression, which would disqualify her under the mental limitations provision of the policy. Would the Court agree?

The medical record was convincing to the Court. No less than three treating physicians had diagnosed her with CFS. Even one of the physicians that Provident hired to perform an independent medical examination had agreed that Perryman’s symptoms met the vague criteria for CFS. At the same time, the medical record needed to go beyond a diagnosis of chronic fatigue syndrome. It also needed to demonstrate whether Perryman had lost the capacity to work for an 8-hour day in a position that was sedentary.

Provident had chosen to discount Perryman’s own testimony regarding her disability. Would the Court do so as well? The Court’s approach was to accept Perryman’s reported impairments as being factual, but also to require sufficient objective evidence to support her functional limitations and restrictions. While her CFS could be causing significant fatigue, this didn’t automatically mean that the fatigue was limiting her functional capacities. Objective tests could verify the severity of her symptoms.

When taken at face value, the opinions of the physicians who had been treating Perryman fully supported her claim of disability. Provident argued that these doctor’s opinions were not credible evidence because they were mere recitals of Perryman’s self-reported symptoms, not opinions formed through objective clinical diagnostic tests. Their in-house review performed by Dr. E.C. Curtis had developed an alternative diagnosis which they felt was just as reasonable.

The Court agreed that it was not obligated to hold the opinions of Perryman’s physicians in higher regard than the opinion of Dr. Curtis. At the same time, the Court had the right to give significant weight to the opinions of physicians who had known and treated Perryman for a considerable length of time. They also felt that the level of the doctor’s expertise in CFS was an important factor. As long as the treating physician’s conclusions appeared reliable and relevant, it remained appropriate to give the information weight, especially when Dr. Curtis had never seen her. His opinion was based entirely on a reading of the medical information in her file.

The Court also refused to consider the opinions of Perryman’s treating physicians worthless because they had listened to their patient’s subjective complaints. Legally and medically CFS is a condition that depends primarily upon self-reported symptoms because there are no tests to quantify the fatigue.

And the Court disagreed strongly with Provident’s contention that there was no objective evidentiary support for the physician’s opinions. The medical record was replete with physical examinations and various clinical tests. There was only one area of testing that the Court agreed with Provident seemed to be lacking, which was testing for mental impairments. At the same time, this lack of testing was not sufficient enough to throw out the observations made by Perryman’s treating physicians. The Court noted that the doctors had all recorded memory problems. One had observed that the problem was not organic, but it was clearly related to the inability to get adequate rest due to the CFS related fatigue. Numerous people who had worked with her and knew her well also reported the memory issues.

Some of Dr. Curtis’ recommendations for clinical testing came into question as well. An article from the American Association for Chronic Fatigue Syndrome, which was given to Dr. Curtis when he received Perryman’s file, clearly stated that certain tests he argued for were not valuable as diagnostic tools for CFS.

Court recognizes sporadic nature of chronic fatigue syndrome.

CFS symptoms are known to be sporadic in nature. In the Court’s eyes, this made the opinions of doctors who had seen her over a longer span of time more viable than the opinion of a physician who had no history with Perryman. Just because some of the opinions of the doctors appeared subjective did not make them invalid. The Court recognized the subjective nature of CFS and the fact that physical examinations can sometimes show a patient’s functioning to be within normal limits.

In Lee v. Bellsouth Telecommunications the Court had ruled that “the consistent diagnosis of chronic pain syndrome” along with “consistent observations of physical manifestations”¦ constitute objective medical evidence”¦ Indeed, the only evidence of a qualifying disability may sometimes be the sort of evidence”¦ characterize[d] as ‘subjective’.” The District Court of Arizona agreed.

Then there was additional evidence that Perryman was incapable of working full time on a sustained basis. The file review performed on August 4, 1997 by Dr. Barton, a Provident medical advisor, found that there was no position that would be feasible for Perryman at that time. An October 17, 1997 independent medical examination performed by Dr. Harris at Provident’s request also confirmed that she would not be able to work more than part-time in a sedentary position. Then Provident employee Joseph Mauvais concluded after his interview with Perryman in February 1998, that she was unable at that time to work in any capacity.

Court recognizes social security disability approval for benefits.

Then, the Social Security Administration determined in August 1998 that Perryman was completely disabled. Her application to Social Security for disability benefits had been mandatory before she could qualify for the “Any Occupation” provision of her disability insurance policy. While this decision was not binding upon Provident, it still remained viable information for the Court to consider.

Provident pointed to the functional capacity evaluation performed on April 12, 1999. This FCE established Perryman’s ability to fill a sedentary position according to Provident’s reading of the information. While the FCE certainly played an important role in Provident’s decision to terminate Perryman’s long-term disability benefits, it could not demonstrate that Perryman was capable of working on a full-time basis consistently.

The Court also found some problems with the FCE’s reporting. The examiner did not record how long Perryman was actually tested. The report only states that the tests occurred during the course of four hours. Perryman reported that she only participated in actual testing for less than an hour during that time. The FCE report claimed to have accounted for the rest Perryman required between tests, but nothing in the explanation made it clear to the Court how the test results demonstrated Perryman’s ability to work in a sedentary position. In Stup v. UNUM Life Ins. Co. of America, the 4th Circuit had ruled that FCE results conducted over 2-1/2 hours don’t necessarily extrapolate into the ability to work an eight, or even a four-hour, workday.

The FCE examiner’s conclusions were also inconsistent with the Department of Labor’s sedentary work classification. DOL defines sedentary work as “sitting most of the time.” The FCE stated that Perryman could only sit for four hours every day. Prior Court decisions have concluded that a four-hour sitting tolerance is insufficient to consider anyone capable of performing sedentary work. In addition to this, the FCE report did not contradict Perryman’s claim that she had needed to take a 45 minute nap after she completed the 13 minute treadmill test, nor did the report claim she had spent more than an hour performing tests during the four hour time frame in which the tests were performed.

Finally, the summary of what the FCE revealed was faulty. It stated that Perryman could sit for six hours, not four as the report had originally stated. Someone had crossed out the four and written a six instead. Both Dr. Curtis and Pam Purdue, who prepared the transferable skills analysis, used this faulty information to render their reports. None of the other FCEs had ever stated that she could sit more than four hours either.

Nor did this FCE contradict the FCEs prepared by her treating physicians. In fact the opinion that she could only stand, walk, drive and sit of 1/2 hour at a time was even more restrictive than the opinions expressed by her treating physicians when they prepared FCEs for her.

Disability attorney argues that video surveillance fails to show ability to work 8-hour day.

Provident argued that the disability video surveillance proved that Perryman was engaging in daily activities that contradicted her self-reported disabling fatigue. When asked how this evidence contradicted Perryman’s claim, Provident could not identify what in the video contradicted the functional abilities that Perryman claimed to not have. She had never claimed she could not drive, nor had she claimed to have any trouble lifting, bending or moving objects. It was also consistent with her testimony that she had days in which she was able to function more effectively than others, a typical feature of CFS. The video surveillance certainly failed to demonstrate that Perryman was capable of working an 8-hour day.

Then Provident argued that between 1994 and 1997, Perryman had earned over $5000 a month, despite her diagnosis of chronic fatigue syndrome. If she could do this, she could not be disabled under the “Any Occupation” provision of the policy. The Court found that this argument overlooked some serious issues. First, it overlooked the fact that she had to cut her hours back, as noted in her medical record. It also overlooked the fact that her coworkers observed the degradation in her work. And it ignored the fact that her supervisor stated that she should have quit working at least four or five months sooner, because she couldn’t remember anything that was going on. And her administrative assistant had reported that working from home had not helped either, because Perryman had days when she never left her bed as well as having memory problems.

Provident also overlooked the fact that much of Perryman’s income during that time frame was based on her cut of the commissions from the staff that worked under her and deferred compensation. Nor did the fact that Perryman continued working after her CFS was diagnosed exclude her from qualifying for disability benefits.

Hawkins v. First Union Corp. Long-Term Disability Plan established the fact that a person who is disabled may because of desperation continue forcing themselves to work even when they have been diagnosed with a disabling condition. Eventually, the person’s ability to push themselves heroically may give out, but this should not be considered a reason to deny disability benefits. Perryman fit this description, and Provident had no right to use it against her.

Perryman’s disability attorney argued that she still qualified for long-term disability benefits under Provident’s “80% of Indexed Earnings” provision, even if she was capable of working an 8-hour day in a sedentary position. The disability attorney argued that the evidence supported Perryman’s contention that she could not earn anywhere near a figure of $182,073 a year with her current functional limitations. Many of the jobs listed by Perdue didn’t even come to 15% of this figure.

Provident wanted to construe the policy’s requirements for “Any Occupation” disability to be calculated on “80% of Indexed Earnings from any occupation she was “reasonably fitted by education, training, or experience.” In this case, the language was far from ambiguous. The Court read the policy language to refer to Perryman’s ability to earn less than 80% of her pre-disability earnings. The plain meaning of the policy’s defined terms made it clear that the 80% was based on pre-disability earnings.

Even the evidence Perdue was able to locate jobs that had earning potentials closer to $182,000, failed to convince the Court. The Court could see nothing in the record that supported such a drastic change from positions that only earned $28,000 – 35,000/year to $137,000 – 249,000/year. The Court also considered the fact that Perryman did not meet the requirements for sedentary work.

Finally, Provident sought to invoke the Mental Limitations provision of the policy. The Court didn’t go for it. First, Provident had not denied the claim for this reason. The medical record clearly stated that the depression had arisen as a secondary symptom of her CFS. Under prior case law, if another reason is the primary cause of the disability, the mental limitation clause cannot not be applied.

The Court sided with Perryman, reversing Provident’s termination of long-term disability benefits. Provident erred in denying her benefits under the “Any Occupation” provision of her long-term disability policy, and she is entitled to all payments from June 1, 1999 through the date of her 65th birthday as stipulated in the policy.

Perryman’s disability attorney asked that she be awarded attorney’s fees and costs under ERISA rules and that she also be awarded pre-judgment interest on all the benefits that she had been wrongfully denied. The Court concluded that Perryman was entitled to both in order to fully compensate her for damages.

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